DAILY MARKET REPORTS
- The S&P 500 and the Dow Jones Industrial Average rose on Monday, supported by energy stocks, while a 3% drop in Apple shares dragged down the Nasdaq.
- The S&P energy index rose 1.21%, leading gains among the major S&P sectors, after oil prices were boosted by the restoration of U.S. sanctions on Iran.
- Apple slid 3.3%, adding to its near 7% fall on Friday, after the Nikkei reported the company has told two smartphone assemblers to halt plans for additional production lines dedicated to the lower-cost iPhone XR.
- Barring losses in the technology group and the FANGs, the markets gained broadly at the start of the week, which will see the all-important U.S. midterm elections and a Federal Reserve meeting.
- Opinion polls show a strong chance for President Donald Trump’s Republican Party holding the Senate but losing control of the House of Representatives to the Democrats – a potential hurdle to Trump’s pro-business agenda, which has been a major factor for the stock market’s rally since the 2016 election.
- With the Federal Reserve meeting on Wednesday and Thursday, investors are fretting over tighter U.S. monetary policy, especially after a string of strong economic data, including Friday’s jobs report..
US FINANCIAL MARKET
U.S. targets Iran with fresh round of oil, economic sanctions
- The United States re-imposed and strengthened economic sanctions on Iran’s oil, banking and transportation sectors on Monday after the Trump administration withdrew from the 2015 Iran nuclear deal, and vowed further action to pressure Tehran.
- The sanctions cover 50 Iranian banks and subsidiaries, more than 200 persons and vessels in its shipping sector, and targets Tehran’s national airline, Iran Air, and more than 65 of its aircraft, the statement said.
- U.S. sanctions permit trade in humanitarian goods such as food and pharmaceuticals, but measures imposed on banks and trade restrictions could make such items more expensive.
Apple cancels production boost for iPhone XR: Nikkei
- Apple has told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the iPhone XR which hit shelves in October, the Nikkei reported on Monday.
- Apple had also asked smaller iPhone assembler Wistron to stand by for rush orders, but the company will receive no orders for the iPhone XR this season, the report said, citing supply chain sources.
- The company warned last week that sales for the crucial holiday quarter would likely miss Wall Street expectations.
Verizon to reorganize business segments
- Verizon Communications will reorganize its business segments into Consumer, Business and Verizon Media Group/Oath to focus on the types of customers it serves.
- The reorganization under Chief Executive Officer Hans Vestberg is a shift from the previous operating structure split between wireless and wireline and included the largest U.S. wireless carrier’s Fios internet and video products.
- The company said the new Verizon Media Group/Oath segment will include media, advertising and technology, and be led by Guru Gowrappan, who had been appointed CEO of Oath, the digital media umbrella that includes Yahoo and AOL.
Lowe’s to shut 51 underperforming stores in the US and Canada
- Home improvement retailer Lowe’s is closing 20 underperforming stores in the United States and 31 in Canada as part of a restructuring, the home improvement retailer said on Monday.
- The company is already shuttering its Orchard Supply chain of 99 stores, leading to between $390 million and $475 million in write-downs.
- The store closings will reduce its earnings by between 28 cents and 34 cents per share, and were not included in the forecast the company provided in August.
Goldman says it is ahead of schedule on $5 billion revenue goal
- Goldman Sachs is ahead of its goal to generate $5 billion in additional annual revenue by 2020, having already achieved half that amount in the first nine months of this year.
- Goldman has made headway on plans to lend more to consumers and big businesses, and improve revenue from trading, investment banking and asset management, according to a presentation given by Chief Financial Officer Stephen Scherr.
- The $5 billion target is “not the limit” of the bank’s ambitions, he said, citing other growth opportunities.
Amazon in late-stage talks with U.S. cities for second headquarters
- Amazon.com is in late-stage talks with Dallas, New York, the Crystal City area of northern Virginia and a few other candidates for the location of its second headquarters, the Wall Street Journal reported on Sunday.
- Talks with the leading contenders are likely in different phases, while discussions with some of the others on Amazon’s shortlist have cooled, the newspaper reported, citing people familiar with the matter.The world’s largest retailer may announce plans to place smaller operations in cities that come in as runner-ups.
US ECONOMY & POLITIC
ISM non-manufacturing index hits 60.3 in October vs. 59.3 estimate
- U.S. services expanded in October more than anticipated as economic growth remained hot, according to a report Monday.
- The ISM non-manufacturing index registered 60.3% in October, above the 59.3 expected from a survey of economists.
- The index jumped to 61.6 in September, which was its fastest expansion on record.
U.S. allows eight importers to keep buying Iran oil for now
- The United States said on Friday it will temporarily allow eight importers to keep buying Iranian oil when it re-imposes sanctions on Monday to try to force Iran to curb its nuclear, missile and regional activities.
- U.S. Secretary of State Mike Pompeo, who announced the decision, did not name the eight, which he referred to as “jurisdictions,” a term that might include importers such as Taiwan which the United States does not regard as a country.
- China, India, South Korea, Turkey, Italy, the United Arab Emirates and Japan have been top importers of Iran’s oil, while Taiwan occasionally buys cargoes of Iranian crude but is not a major buyer.
Both Parties Brace for Surprises as Midterm Campaign Goes Down to the Wire
- The most expensive midterm campaign in U.S. history raced to a finish ahead of Tuesday’s election, as both sides braced for a split decision that would hand the House to Democrats and leave Republicans holding or expanding their Senate majority.
- A Washington Post-ABC News poll showed likely voters prefer Democratic candidates over Republicans ones for the House, 51% to 44%.
- Among registered voters, 44% approved of the job Trump is doing as president, while 52% disapproved, his best margin in this poll among this group during his presidency.
- A CBS poll released on Sunday projected that Democrats may win 225 seats, more than enough for a majority, but the margin of error of plus or minus 13 seats showed the outcome’s far from set.
- In the fight for the Senate, Republicans enjoy the advantage of having to defend only nine seats, compared with 26 for the Democrats, to maintain or expand their 51-49 majority.
- Polls showed Senate races in Arizona, Nevada, Missouri, Indiana and Florida all within the margin of error, with those in Montana and Texas also tight.
- The Democratic incumbent most at risk is Senator Heidi Heitkamp, who’s consistently trailed Republican Representative Kevin Cramer in North Dakota, a state Trump won by almost 36 percentage points.
U.S. courts rule against Georgia on voter suppression cases
- Two federal courts on Friday issued rulings that order Georgia to allow some 3,000 naturalized U.S. citizens to vote in elections next week and prevent the state from throwing out some absentee ballots.
- The rulings are a rebuke to Secretary of State Brian Kemp, whose office oversees the voter rolls and who is the Republican candidate in the state’s hotly contested gubernatorial race.
- Civil rights groups sued Kemp in October over 50,000 voting registration applications placed on hold due to Georgia’s “exact-match” law, requiring that personal information on voter applications match what is on state databases.
- The issue of voter suppression has been central to the governor’s race in Georgia, where Kemp is facing Democratic candidate Stacey Abrams, who is seeking to become the country’s first female, black governor..
EUROPE & WORLD
Ferrari’s earnings rise, lack of full-year upgrade hits shares
- Ferrari reported an almost 5% increase in third-quarter core earnings, helped strong sales of 8-cylinder and 12-cylinder models but stuck with its full-year profit forecast, which hit the company’s shares.
- Revenues were roughly flat at 838 million euros, slightly below expectations, while shipments were up 10.6%, helped by strong sales of 8-cylinder models such as the Portofino and 12-cylinder models such as the 812 Superfast.
- Adjusted EBITDA for the period rose to 278 million euros ($316 million) from 266 million, compared with 282 million euros analyst consensus.
China’s Xi promises to raise imports amid trade row with U.S.
- Chinese President Xi Jinping promised on Monday to lower tariffs, broaden market access and import more from overseas at the start of a trade expo designed to demonstrate goodwill amid mounting frictions with the United States and others.
- In a speech that largely echoed previous promises, Xi said China would accelerate opening of the education, telecommunications and cultural sectors, while protecting foreign companies’ interests and punishing violations of intellectual property rights.
- He also said he expects China to import $30 trillion worth of goods and $10 trillion worth of services in the next 15 years.
- Last year, Xi estimated that China would import $24 trillion worth of goods over the coming 15 years.
- With little in the way of fresh policies from Xi on Monday, all eyes now turn to an expected meeting between him and Trump at the G20 summit in Argentina at the end of the month.
Trade war, spy claims cloud horizon for China airshow
- Trade frictions with the United States and accusations of industrial espionage are set to cast a cloud over China’s largest aerospace meeting this week, as suppliers consider what the country’s slowing economy could mean for booming jet demand.
- The biennial Airshow China, to be held in the coastal city of Zhuhai during Nov 6-11, is traditionally an event for Beijing to parade its growing aviation prowess in front of aerospace executives, diplomats and arms buyers from over 40 countries.
- But analysts say they are not expecting many headline announcements or big deals this year as a bruising trade war between Beijing and Washington and a slowing Chinese economy cause companies to be cautious.
- China is expected to put on a show of strength in space and defense, with self-developed fighter training FTC-2000 aircraft, a historically high number of weapons as well as its latest unmanned aerial vehicles among the kit on display.
Brazil’s Embraer sells jets worth $705 million to American Airlines
- Brazilian planemaker Embraer said American Airlines has placed a firm order for 15 E175 jets, a contract valued at $705 million.
- Including prior orders, American Airlines now has 104 such jets on order, Embraer said.
TODAY in HISTORY
- The Gunpowder Plot to blow up the English Parliament failed. (1605)
- Susan B. Anthony was fined $100 for trying to vote in the presidential election. (1872)
- President Franklin D. Roosevelt won an unprecedented third term in office when he defeated Wendell L. Willkie. (1940)
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, the Wall Street Journal.
Content posted by third parties on this site is screened in order to protect clients’ privacy and comply with regulatory requirements. Content containing sensitive personal information, inappropriate language, information about specific investments, misleading information, information about other companies or websites, or information related to litigation will be removed. Content posted by third-parties on this site remains the responsibility of the party posting the content and is not adopted or endorsed by Pence Wealth Management or LPL Financial. Any opinions or statements posted by third parties are their own and may not be representative of the experience of others and are not indicative of future performance or success. Third party content on this site does not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness.